Mr. Obal­eye holds a B.Sc de­gree in Man­age­ment and Ac­count­ing from Obafemi Awolowo Univer­sity, Ile-Ife, and M.Sc de­gree in Busi­ness Ad­min­is­tra­tion from Univer­sity of Abuja. He is an As­so­ci­ate Mem­ber of the In­sti­tute of Char­tered Ac­coun­tants of Nige­ria (ICAN), Nige­ria In­sti­tute of Man­age­ment (NIM), and the Char­tered In­sti­tute of Tax­a­tion of Nige­ria (CITN). He is also an alum­nus of Whar­ton Busi­ness School, Philadel­phia, USA. On chal­lenges and op­por­tu­ni­ties of sus­tain­able ur­ban­iza­tion in Nige­ria through hous­ing. Ola­banjo Obal­eye (OO): Let me start off with the op­por­tu­nity. There are enor­mous op­por­tu­ni­ties for hous­ing de­vel­op­ment in Nige­ria. The mar­ket is huge and de­mand is al­most in­elas­tic. When you have a hous­ing gap of between 17 to 24 mil­lion units of houses, and in­creas­ing at about 2.5 per­cent ev­ery year, any in­formed in­vestor would un­der­stand there is con­sid­er­able busi­ness in the mar­ket.

We can also look at hous­ing beyond the eco­nomic op­por­tu­ni­ties. With such a huge hous­ing short­age, it shows that only few peo­ple are well shel­tered in Nige­ria. Nev­er­the­less, shel­ter is the sec­ond most im­por­tant need of hu­man life; that is, af­ter food.

There has to be a struc­tured plan for peo­ple to have their own homes. And such a plan has to pro­vide for sus­tain­able and af­ford­able hous­ing, as well as hous­ing that is of a de­cent stan­dard. We can achieve all this if we re­move all the bot­tle­necks in the ecosys­tem, from land ac­qui­si­tion to mort­gage.

Mort­gage banks are in the van­tage po­si­tion to make hous­ing af­ford­able for peo­ple. Rather than spend­ing so many years to build your own house, mort­gage banks can make it pos­si­ble for you to have a house now and pay for it over a pe­riod of 20 years. The longer the ten­ure, the lesser the amount you are ex­pected to pay monthly.

But the chal­lenges we have in Nige­ria to­day in­clude lack of long-term fund­ing and in­ad­e­quate mort­gage cre­ation. In hous­ing de­vel­op­ment, you have the sup­ply side, which com­prises the construction of houses, and the de­mand side, which en­tails the hous­ing con­sumers. If the hous­ing sup­ply is not enough, there would be more de­mand than the houses that are avail­able. Liq­uid­ity is es­sen­tial for construction, and for lenders in cre­at­ing mort­gages.

The Nige­ria Mort­gage Re­fi­nance Com­pany (NMRC) came on board as a sec­ondary mort­gage re­fi­nanc­ing com­pany. Its pri­mary fo­cus is to re­fi­nance al­ready cre­ated mort­gages. That will em­power mort­gage banks to cre­ate more mort­gages. But as much as there are op­por­tu­ni­ties in the Nige­rian hous­ing sec­tor, the en­vi­ron­ment is not con­ducive for mort­gage busi­ness. There­fore, it has been dif­fi­cult to at­tract in­vestors.

While there is not enough in­vest­ment to en­hance liq­uid­ity, the le­gal in­fra­struc­ture is not sup­port­ive of mort­gage cre­ation. Land ad­min­is­tra­tion in the coun­try has its own problems. The Land Use Act was en­acted in 1978. The orig­i­nal in­ten­tion of the act was to sim­plify the process of land ac­qui­si­tion. Be­fore then, it was dif­fi­cult to lo­cate who owned a par­tic­u­lar land. The act pro­vides for the trans­fer of the rights on land to govern­ment, as the govern­ment ad­min­is­ters it on be­half of the peo­ple. The in­ten­tion was good but the im­ple­men­ta­tion is where we have problems.

Un­der the act, govern­ment con­sent has to be se­cured be­fore any trans­ac­tion on land can be con­sum­mated. For in­stance, if you want to buy a prop­erty from Mr. A, he must get govern­ment’s con­sent to sell the prop­erty. And then when you need a bank to give you mort­gage, the bank has to get govern­ment’s con­sent to cre­ate mort­gage on the prop­erty. How­ever, the process of ob­tain­ing this con­sent – in­clud­ing the high cost of ob­tain­ing it – is cum­ber­some and in­im­i­cal to busi­ness. This is why mort­gage is ex­pen­sive, fur­ther com­pound­ing the hous­ing af­ford­abil­ity prob­lem.

The res­o­lu­tion of mort­gage dis­putes is also long and cum­ber­some due to lack of fore­clo­sure laws. Mort­gage dis­pute res­o­lu­tions in Nige­ria have to be ex­pe­di­tious to en­cour­age in­vestors and un­leash the po­ten­tial of the sec­tor.

To fur­ther make the hous­ing sec­tor at­trac­tive to in­vestors, the Land Use Act must be amended to re­move the bu­reau­cratic bot­tle­necks in land ad­min­is­tra­tion and ti­tle trans­fer. I will pro­pose the con­sent pro­vi­sion in the Act should be re­moved com­pletely. Regis­tra­tion can serve as a bet­ter al­ter­na­tive. Once, the le­gal ti­tle has been ob­tained on the prop­erty, sub­se­quent trans­ac­tions on the same prop­erty don’t need govern­ment con­sent. A regis­tra­tion should suf­fice.

If the cost of regis­tra­tion is eco­nom­i­cal and af­ford­able, more peo­ple would reg­is­ter their prop­erty, re­sult­ing in more rev­enue to the govern­ment. We are look­ing to get to a place where a hous­ing trans­ac­tion would be com­pleted within a week and the cost would not be more than 0.5 per­cent of the prop­erty.

I will also pro­pose we have a spe­cial court for ex­pe­di­tious ad­ju­di­ca­tion of mort­gage dis­putes. There should be spe­cial pro­ce­dures for com­mer­cial dis­pute set­tle­ments.

In ad­di­tion, Nige­ria must have na­tional hous­ing code, which ev­ery­one must com­ply with. The well-laid es­tates in Abuja, built by real es­tate de­vel­op­ers, fol­low a par­tic­u­lar code and struc­ture. But most of the prop­er­ties de­vel­oped by in­di­vid­u­als don’t ad­here to any form of code.

On key projects of In­fin­ity Trust Mort­gage Bank Plc.

OO: We have so many prod­ucts that we de­vel­oped over a long pe­riod to take ad­van­tage of the op­por­tu­ni­ties we see in the mar­ket. For in­stance, we found that af­ford­abil­ity is a cen­tral re­quire­ment for a lot of peo­ple seek­ing to own their own homes. For this rea­son, we cre­ated what we call In­fin­ity Save and Own a Home Ac­count (I-SOH). This prod­uct en­ables you to start sav­ing from the time you se­cure an em­ploy­ment.

We want to im­bue a sav­ings cul­ture in peo­ple for the spe­cific pur­pose of own­ing their homes. Once you get a job, you can start to save to ac­quire the house you want. If you save a cer­tain amount ev­ery month, con­sis­tently for 24 months, it pro­vides a ba­sis for eval­u­at­ing you as a po­ten­tial ben­e­fi­ciary of a cer­tain type of mort­gage. We will be able to pre­qual­ify you for mort­gage and de­ter­mine the amount you would be able to pay monthly, based on your monthly sav­ings in the pre­ced­ing two years. We have a lot of peo­ple who have ben­e­fited from our I-SOH scheme.

We also have the In­fin­ity Pre­mium Home Ac­qui­si­tion Loan (I-PHAL). Our busi­ness is struc­tured to cater for the low in­come, mid­dle in­come and high-in­come cat­e­gories of Nige­ri­ans. In other words, we have hous­ing prod­ucts that are de­signed for each of th­ese cat­e­gories. We part­ner with real es­tate de­vel­op­ers to pro­vide hous­ing for Nige­ri­ans in all the in­come brack­ets.

We have an es­tate in Karu where you can get two-bed­room bun­ga­lows for N10 mil­lion for a unit and three-bed­room bun­ga­lows for N15 mil­lion per unit. We have an­other es­tate in the Abuja metropo­lis where you can get houses from N20 mil­lion to N60 mil­lion per unit. We have de­vel­oped the ex­per­tise to cre­ate prod­ucts to cap­ture all the mar­ket seg­ments where we op­er­ate.

On rec­om­men­da­tions for pol­icy re­form to drive sus­tain­able ur­ban­iza­tion in Nige­ria.

OO: The largest hous­ing deficits in Nige­ria are in the ur­ban ar­eas. This is as a re­sult of the con­tin­u­ous mi­gra­tion of peo­ple from ru­ral com­mu­ni­ties to the ur­ban re­gions of the coun­try. For this rea­son, even as the ur­ban ar­eas are be­com­ing con­gested, the govern­ment needs to have a na­tional hous­ing plan. The com­po­nents of the plan must ad­dress the af­flu­ent, work­ing class and the very in­di­gent mem­bers of so­ci­ety.

Whether we like it or not, not ev­ery Nige­rian would be able to af­ford a home. This does not pre­clude the need for shel­ter for the very poor. Such a na­tional hous­ing plan must take care of ev­ery­body. Where there is need for sub­sidy, it should go to those peo­ple who can­not af­ford hous­ing with­out the sub­sidy.

But govern­ment can pro­vide a pro­gramme like rent-to-own for the work­ing class. The houses should be made avail­able to them and then they can pay small amounts they can af­ford pe­ri­od­i­cally un­til the houses be­come theirs. In­fin­ity Trust Mort­gage Bank has a prod­uct we call rent-to-own. The aim is to fur­ther deepen the mar­ket and cre­ate more op­por­tu­ni­ties for peo­ple that can­not af­ford to buy.

Also im­por­tant is the fact that you don’t have to own the house you have for the rest of your life. Hous­ing is like any stock. When you buy a house now, you can sell it to­mor­row when the value of the house has in­creased. You can then in­vest in an­other house or other as­sets. We have a prod­uct that tar­gets in­vest­ment in stocks of houses. We have seen peo­ple who started with N10 mil­lion and their prop­er­ties are val­ued at about N100 mil­lion to­day.

The res­o­lu­tion of mort­gage dis­putes is also long and cum­ber­some due to lack of fore­clo­sure laws. Mort­gage dis­pute res­o­lu­tions in Nige­ria have to be ex­pe­di­tious to en­cour­age in­vestors and un­leash the po­ten­tial of the sec­tor.